I have already cut back on my spending, and will do so ruthlessly throughout the year.That extra 1k a yr I am loosing, has caused me to even more look into buying things on discounts and cut back on discretionary spending for myself and the kids.

People now have less income as sales drop and income drops as a direct result.

Taxes go up as a result of a lack of sales tax income resulting in the government finding other "revenue streams".

People spend even less.

I'm all for paying a fair share but when the government takes over 50% of your income after everything is said and done it doesn't promote the economy, it stifles consumer spending, and leads to less tax income for said government.

Personally the payroll tax won't affect much spending, the penalties for not having health care and the penalties for having too many employees means we won't grow as a company, but the payroll tax won't directly affect my spending.

That said I understand why me cutting back spending won't make things better and it will only affect the people I normally spend money with.

LordKronos

Senior Member - 2K

posted: Jan. 11, 2013 @ 6:14p

For me it will be fairly transparent. Were' having another kid, so -1k payroll tax, +1k child tax credit. The bigger impact to me this year will be the extra $3k spent for better health insurance.

nonplus

Senior Member - 1K

posted: Jan. 11, 2013 @ 6:15p

I spend a lot more money on ice cream now.

InTrouble

Member

posted: Jan. 11, 2013 @ 6:33p

It won't impact my behavior at all.

technolich

Senior Member

posted: Jan. 11, 2013 @ 6:33p

atohmc said: I spend a lot more money on ice cream now.

Look at this rich guy, I bet you'll wash it down with MILK when it skyrockets in price just to show how awesome you are compared to the rest of us.

It would be pretty amazing to see the government drop all subsidies of businesses and let the market work itself out.

Ice Cream would get a lot more expensive but it's okay because half of the products on the shelf are just frozen desserts anyways...

You know, I really can't tell if you didn't get the joke, or if it was I that didn't get the joke in your reply.

SpeedingLunatic

Senior Member

posted: Jan. 11, 2013 @ 7:07p

atohmc said: I spend a lot more money on ice cream now.

I'm planning on spending 7-10x my salary on ice cream this year. Nothing to do with the tax situation though...

cheezedawg

Senior Member - 4K

posted: Jan. 11, 2013 @ 7:14p

It will probably feel similar to a few years ago when the rate was the same as it is today.

althes

Senior Member

posted: Jan. 11, 2013 @ 7:15p

People at work are already complaining as some just received their paychecks.You guys are correct it will be a vicious cycle this year, i already see people at work putting off purchases and buckling down.It really came as a shock for alot of folks.My company has also suspended the 401k match this year and that caused alot of talk.Seems like no raises either at work, so time to tighten the belt buckle and hang on for a rough ride.

string3599

Senior Member

posted: Jan. 11, 2013 @ 7:16p

When the payroll tax holiday was implemented I just increased my 401k contribution by 2%. Now that the holiday expired I just decreased my contribution by 2%. So my spending won't be affected.

I'm planning on spending 7-10x my salary on ice cream this year. Nothing to do with the tax situation though...

What flavor?

lonestarguy

Enthusiastic Member

posted: Jan. 11, 2013 @ 7:20p

When the payroll tax was cut 2 years ago I upped my 401K contribution by 2% so it had no effect on my the last two years except to build up my retirement. I may end up reducing my contribution later, but as OP said, I am really trying to cut back to save up a better emergency fund and pay off the house this year. Last year I put 50% of my income into paying off my HEL from 39K to 13K, 20% of my income into my 401K and several grand more to build up a 6 month emergency fund and buy some more stocks and bonds. I try to keep living expenses at under 25% of my income. My worry is they will penalize savers by means testing social security even more in the future -- so you are damned if you prepare and rewarded if you are irresponsible.

Loafofbreadhead

Member

posted: Jan. 11, 2013 @ 7:42p

I don't know, I just don't see how this 2% is going to affect the behavior of the general population. Most people I know have no clue about finance, budgeting, or general investing. I suspect they will maintain a similar lifestyle which may meant they rack up a little more debt than they usually do. I personally just do little things to off-set this - dump more pre-tax money into my FSA, max out my HSA, etc. I think this will have have a very limited impact and by June we won't even notice this slight decrease in net pay.

fwvisitor

Senior Member

posted: Jan. 11, 2013 @ 8:08p

my company went from 26 paychecks to 24 paychecks this year. I guess the psychological impact of a lower paycheck is minimized right there

If you're self employed you pay estimated taxes based on the previous year, so you won't actually feel the effects of 2013 increasing until 2014 when suddenly you'll owe more when filing your taxes in 2014 if your income stayed the same from 2012 to 2013. That means during the course of 2013 you probably won't think much about it at all.

TravelerMSY

Senior Member - 6K

posted: Jan. 11, 2013 @ 9:12p

My level of spending isn't closely correlated to my income, so it will make no difference at all.

RailroadTrack

Enthusiastic Member

posted: Jan. 11, 2013 @ 9:35p

Won't impact me at all. I knew the payroll tax holiday wasn't going to last forever, so it went into my 401k. I started my fiscal year back in October and cut back eating out by a lot, started cooking a lot more and that alone saved me a few hundred per month.

If you're sweating bullets about 2%, you have bigger issues. I know it's money, but we knew it wasn't going to last forever. Plan accordingly.

bopc1996

Senior Member

posted: Jan. 11, 2013 @ 9:51p

None at all

curtster

Cranky Member

posted: Jan. 11, 2013 @ 9:58p

I've increased my Vanilla Reload churn to more than compensate, so my spending is staying the same but my saving is going up.

abracadabra1

Ancient Member

posted: Jan. 11, 2013 @ 10:02p

Well, considering I received a 1.7% increase in my salary in 2013, the 2% payroll tax increase will be fairly transparent.

ChumChurum

Senior Member

posted: Jan. 11, 2013 @ 10:25p

technolich said: 2013 will probably catch the economy in a vicious cycle.

Taxes go up.

People spend less.

People now have less income as sales drop and income drops as a direct result.

Taxes go up as a result of a lack of sales tax income resulting in the government finding other "revenue streams".

People spend even less.

I'm all for paying a fair share but when the government takes over 50% of your income after everything is said and done it doesn't promote the economy, it stifles consumer spending, and leads to less tax income for said government.

Personally the payroll tax won't affect much spending, the penalties for not having health care and the penalties for having too many employees means we won't grow as a company, but the payroll tax won't directly affect my spending.

That said I understand why me cutting back spending won't make things better and it will only affect the people I normally spend money with.

although not at the margin, you pay 12.4% of the first $113K in social security tax. if you are making $250K, that's roughly 6.2%.

i think at the margin, tax is pushing close to 70% at the high end.

ChumChurum

Senior Member

posted: Jan. 11, 2013 @ 10:30p

Loafofbreadhead said: I don't know, I just don't see how this 2% is going to affect the behavior of the general population. Most people I know have no clue about finance, budgeting, or general investing. I suspect they will maintain a similar lifestyle which may meant they rack up a little more debt than they usually do. I personally just do little things to off-set this - dump more pre-tax money into my FSA, max out my HSA, etc. I think this will have have a very limited impact and by June we won't even notice this slight decrease in net pay.

I strongly disagree with that statement. By that token, if you add a 1% tax every year, most people won't notice it. In 50 years, you would have added 50% in taxes.

When you remove 2% of income on 100Million people, there bound to be macro effects.

abracadabra1 said: Well, considering I received a 1.7% increase in my salary in 2013, the 2% payroll tax increase will be fairly transparent.

The way to go - I like your attitude! Personally, 1K on a 50K salary should not mean the end of the world. The other thing is that there is no increase in payroll tax - we are back to normal. What really happened was that there was a bonus given to people for the last 2 years and hopefully people enjoyed the bonus, thanked god for a good time and now we are back to normal instead of feeling that there is an increase in tax.

PrincipalMember

Senior Member - 1K

posted: Jan. 11, 2013 @ 10:45p

PrincipalMember said: What really happened was that there was a bonus given to people for the last 2 years and hopefully people enjoyed the bonus, thanked god for a good time.

I don't want to be insensitive to the people who are losing homes because they happened to buy at the wrong time but for others, the interest rates are really low - i.e. the biggest expense in one's budget is really low. I also presume that this has kept a lid on the rents. Now you can say that there is no money to be made in the CD's. True - but hopefully, your mortgage is much higher than your CD balance - i.e. still on the positive side. And for those who took some risks in the stock market, at least the year is starting out very nicely - so at least for now, there should be no reasons to be feeling gloomy.

People now have less income as sales drop and income drops as a direct result.

Taxes go up as a result of a lack of sales tax income resulting in the government finding other "revenue streams".

People spend even less.

I'm all for paying a fair share but when the government takes over 50% of your income after everything is said and done it doesn't promote the economy, it stifles consumer spending, and leads to less tax income for said government.

Personally the payroll tax won't affect much spending, the penalties for not having health care and the penalties for having too many employees means we won't grow as a company, but the payroll tax won't directly affect my spending.

That said I understand why me cutting back spending won't make things better and it will only affect the people I normally spend money with.

although not at the margin, you pay 12.4% of the first $113K in social security tax. if you are making $250K, that's roughly 6.2%.

i think at the margin, tax is pushing close to 70% at the high end.may want to check your math. 70% happens at very low income when subsidies are phased out, not at high end. Social security doesn't affect the high end.

whodini

Senior Member - 2K

posted: Jan. 12, 2013 @ 7:26a

The average person will feel the $1k pinch. Those who voted for the wealthy to pay their fair share, got a piece of the action, too. And they don't like it one bit!

At least for me I will start using both sides of the toilet paper to conserve.

string3599

Senior Member

posted: Jan. 12, 2013 @ 8:32a

Keep in mind though that 2013 is the first year since 2008 that Americans aren't receiving some sort of inflated paycheck. In 2011 and 2012 we saw the 2% payroll tax holiday and in 2009 and 2010 there was the Making Work Pay Tax Credit.

The Making Work Pay Credit was $400 for single filers and $800 for joint filers. Although this was a credit when the income tax return was filed, Americans effectively received this credit throughout the year with their paychecks as the withholding tables were adjusted.

Now there is no credit and there is no holiday so Americans are receiving their lowest paychecks since 2008.

It would be pretty amazing to see the government drop all subsidies of businesses and let the market work itself out.

Ice Cream would get a lot more expensive but it's okay because half of the products on the shelf are just frozen desserts anyways...

Beer is much better for you. Less calories and more healthy.Milk is not good for you unless you are a calf

Skipping 91 Messages...

scrock

Senior Member

posted: Mar. 7, 2013 @ 3:46p

harruin said: BostonOne said: miqie said: I don't mind paying my fare share of taxes, but the gov't already has enough income coming in. They just don't know how to spend it efficiently. They will just waste this tax increase, also. I think this will ahve a negative effect on the economy because people will ahve less to spend.Unless you're in the top 1%, you're not paying your fair share.Could you give me a breakdown how much more the common man benefits over the rich from the government?

You make 50,000 a year. I make 25,000 a year. When you and me go to Six Flag, my ticket cost 25 bucks, and yours is 100 bucks. Fair? By paying nil to federal income tax, common man benfits about 20 to 30 percents more over the rich from the goverment.By paying nil to fereral income tax, common man benfits about 500,000 dollar per year over the rich from the goverment.

By common, I mean the 50% that does not pay federal income tax. By rich, I mean top 1% that everyone wants to xxx on.

I am all for RICH SHOULD PAY MORE. As long as it is fair. Meaning, if someone pay more than I do for the federal goverment, they should get better service from the fed. There should be an express line at all federal facility for the poeple that pay top tier price.

Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Members of our community may attach files to a post in accordance with the User Agreement. FatWallet is not responsible for the content, accuracy, completeness or validity of any information contained in any attached file. Files have *not* been scanned for viruses. Be especially wary of Excel files which may contain malicious content.

FatWallet coupons help you save more when shopping online. Use our Coupons Search to browse coupons and offers from thousands of stores, gathered into one convenient location.

Forums
As part of our FatWallet Community, you can share deals with almost a million shoppers in our forums. Forum content is generated by consumers for consumers. Share deals, money-saving tips, and more. It's FREE, fun, and addicting.

Support
Our customer experience team is here around the clock - real people ready to assist.